Tapestry of Cross-Border Expansion Strategy by Navigating Ecological Risks: Joint Ventures Versus Acquisitions in India’s Textile Industry

Soumyatanu Mukherjee, Sidhartha S. Padhi, Ranit Sinha and Faisal M. Ahsan
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Soumyatanu Mukherjee: XLRI - Xavier School of Management, Jamshedpur, India
Sidhartha S. Padhi: Indian Institute of Management Kozhikode, Kozhikode, India
Ranit Sinha: Indian Institute of Management Kozhikode, Kozhikode, India
Faisal M. Ahsan: XLRI - Xavier School of Management, Jamshedpur, India

American Business Review, 2026, vol. 29, issue 1, 145-174

Abstract: We study how host-country ecological risk and carbon emissions shape Indian textile firms’ choice between cross-border acquisitions (CBAs) and cross-border joint ventures (CBJVs). We extend institutional theory by introducing ecological performance and sustainability disclosure shocks into entry-mode choice. The Environmental Outsourcing Hypothesis (EOH) posits that firms facing environmental liabilities prefer full acquisitions in jurisdictions with poorer ecological performance, effectively “outsourcing” environmental exposure to the host setting. Using 171 cross-border transactions (39 countries; 2004–2020) and Tobit/Logit/OLS models plus difference-in-differences and Heckman selection, we find: (i) higher ecological risk and higher direct (Scope 1) emissions in the host are associated with a higher likelihood of CBAs; (ii) sustainability disclosure reforms shift choices toward CBJVs; (iii) strong formal institutions and higher direct partner risk tilt toward CBAs, while higher indirect (sovereign) risk tilts toward CBJVs. Results are robust across specifications. We integrate ecological performance into institutional theory and offer actionable implications for managers and policymakers in environmentally intensive industries.

Keywords: Institutional Theory; Acquisitions; Joint Ventures; Ecological Risk; Environmental Outsourcing Hypothesis; Indian Textile Companies (search for similar items in EconPapers)
JEL-codes: Q50 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ris:ambsrv:022661

DOI: 10.37625/abr.29.1.145-174

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